Contract Manufacturer Eyes Optics
EMS firm BreconRidge Manufacturing Solutions Corp. today announced an agreement to acquire the assets and intellectual property of Nortel Networks Corp.'s (NYSE/Toronto: NT) High Speed Modules business (see BreconRidge Buys Nortel Module Unit). The division provides OC192 modules for Nortel's OPTera product lines.
BreconRidge will take over Nortel's lease of a 330,000-square-foot manufacturing facility on Palladium Drive in Ottawa, and it has signed a three-year agreement to supply Nortel with OC192 modules. The dollar value of the deal was not disclosed.
The deal harkens back to 2001, when large EMS firms such as Celestica Inc. (NYSE, Toronto: CLS), Flextronics Corp. (Nasdaq: FLEX), and Solectron Corp. (NYSE: SLR) began creating photonics divisions. Many of them had worked with OEMs such as Cisco on a systems level, but they saw optical components as a viable area of growth. That perspective led to a flurry of optical-related acquisitions as the downturn accelerated (see Contract Manufacturers Consolidate).
BreconRidge's roots are in telecommunications, as the Ottawa-based company was founded in 2001 by Terence Matthews, also the founder of Newbridge Networks Corp. (NYSE: NN; Toronto: NNC). Matthews paved the way for BreconRidge's development by selling it the manufacturing division of Mitel Networks, in which he had acquired controlling interest early in 2001.
Even though the OC192 market isn't exactly on fire (not in a good way, anyway), the modules business plays into BreconRidge's overall strategy. Like most large EMS players, BreconRidge wants to offer design consulting, gaining extra revenues by helping its customers design their products for more efficient manufacturing.
"Optical might be slow, but there's a significant amount of room for our firm to play, given the amount of engineering talent it requires," says Shaun McEwan, BreconRidge CFO.
Along those lines, BreconRidge is offering jobs to the Nortel engineers from the High Speed Modules business, McEwan says.
"Over 90 percent of the Nortel Networks employees who are today part of the High Speed Modules businesses are expected to receive offers of employment from BreconRidge. This translates into about 100 employees," writes Brenda Valois, executive advisor to Nortel Networks' CTO, Greg Mumford, in an email to Light Reading.
— Craig Matsumoto, Senior Editor, Light Reading